Viewpoint: Issues with the ‘Zoned Capacity’ Argument

The ‘Zoned Capacity’ Argument is Misleading
– We need a different conversation

At a recent event hosted by the Urbanarium, the City of Vancouver’s new general manager of planning and sustainability, Gil Kelley, had the opportunity to introduce himself to the collected nerdy-urbanists (myself included) and to introduce us to his planning philosophy. It was a great conversation and throughout the presentation there seemed to be a lot of nodding and agreement with the broad statements of both values and process.

Mid-way through, however, there was one moment that stood out as a bit of a non-sequitur. Following up on the need to take on ‘big ideas’ he mentioned briefly that we may not need to make any large interventions into the current zoning map because we already have the necessary ‘zoned capacity’ to take us to 2040. This comment lit up many twitter feeds and garnered a pointed question from the audience at the end of the event.

I don’t fault him the attempt to temper the fears or expectations of large-scale changes under his watch. What it does highlight, however, is that the idea of ‘zoned capacity’ is a real trigger in the local conversation.

How did “zoned capacity” become such a flashpoint in Vancouver? In large part it is due to the efforts of character-retention advocates who have argued (in a large number of op-eds) that we don’t need to update our zoning map (and so risk the loss of existing character homes) because there already exists enough unused capacity within our current zoning plans to absorb all of the necessary growth for the next 20 years. On its surface the idea seems both simple and compelling, and – for this reason – it has gone largely unchallenged until recently.

I’ll add some thoughts that stem from my experiences designing and building single-family homes in Vancouver:

Um, What about re-zonings?

The idea of “20 years zoned capacity” seems to have really taken flight based on a 2014 consultant report looking at multifamily zones. Buried in there is an acknowledgement that about half of that 20 years of zoned capacity will actually come from re-zonings. While single-family houses usually are built within the current zoning, by contrast a large percentage of the city’s multi-family housing in Vancouver is being done through a re-zoning process. If we have enough ‘zoned capacity’ why is this?

There’s a second acknowledgement that much of what is currently zoned might not be where the market wants to build.

By relying on re-zoning to provide half of our multifamily capacity, we’re biasing the city towards large-scale development while neglecting the so-called missing middle: duplexes, four-plexes, town houses and other forms that are smaller and much finer grained – housing types that work better in a context where there is ‘pre-zoning’ (by updating the zoning map) versus relying on spot re-zoning.

Every re-zoning exemplifies the fact that our current zoning map (our ‘zoned capacity’) is either the wrong size, the wrong type or in the wrong location. If we need to re-zone, then we don’t have enough ‘zoned capacity’ – or the zoning that we do have is out-of-date relative to today’s needs. Perhaps it’s time to take another look at pre-zoning.

Spreading the love (lane house style):

It turns out that we have an interesting example of citywide pre-zoning: The 2009 laneway house bylaw.

The laneway-houses update was unique in that density was added city-wide to the majority of the city’s ‘single family’ lots. Overnight some 60,000+ lots became eligible to add this new type of purpose-built rental and, in the years since, nearly 400 of the units have been built per year.

A map of the 2000+ built lane houses shows that they are spread evenly across the city in both the richer and (relatively) poorer neighbourhoods, and in areas with higher and lower density. Both the benefits and impacts of this new density have been able to be spread across the city, and home owners across the city have been able to age-in-place, supplement their income or provide housing for their extended family.

Why? Because the zoned capacity for lane houses is ~150 times the annual throughput.

To put it another way, in the next 20 years if we keep building 400 lane house per year, then we’ll have only used up 1/8 of the pre-zoned capacity. Yet another way to put it: the pre-zoned capacity for lane houses is ~16 times higher than the pre-zoned capacity for multi-family housing. This is why we’re seeing lane houses everywhere, but not the other missing middle housing types.

This is also why the lane house policy has allowed individual homeowners to act as the de-facto developer. Citywide pre-zoning can allow new dwellings to be infilled in small increments and even single lots. This stands in stark contrast to the re-zoning approach, which almost always involves lot consolidation and rarely allows existing owners to densify-in-place.

If you want the development of your city to be a more equitable process, and you want to avoid the appearance that only certain communities and corridor residents need to bear the brunt of redevelopment, then the pre-zoned capacity needs to be much much larger than the amount of housing you actually want to build each year.

New zones are great (if you can find them):

Tucked away in the neighbourhood plans for areas like Norquay Village and Grandview Woodlands have been some really interesting new zones created for stacked townhouses and other ‘missing middle’ housing types, but if you zoom out, it becomes clear that these pockets of pre-zoning are few and far between.

The city has 24 neighbourhoods. Of these 24, only six have so far gone through a more detailed planning process that resulted in a pre-zoning map. The other neighbourhoods (Dunbar, etc.) are coasting on CityPlan vision statements from the late 90s while relying on corridor re-zonings (and the lane-house bylaw) for their evolution.

At first glance this corridor approach seems fine, but, as the lane house policy showed, there is a widespread latent demand for new flexibility and new housing options within our one- and two-family zones. A pre-zoning approach (that complements our neighbourhood plans) would spread both the opportunity and impacts more equitably.

As we start a new conversation about the future of our city, we need to acknowledge that the ‘zoned capacity’ argument is – at best – an argument for continuing to focus on larger scale re-zonings, and – at worst – is a misdirection aimed at channeling densification into certain corridors and communities while leaving the zoning of our one and two family neighbourhoods static.

It’s time to acknowledge that the world is changing faster than our plans, and we probably need to revisit our approach to ‘zoned capacity’.

* Bryn Davidson lives and works in Vancouver. His team designs and builds custom homes for individual homeowners and their families.

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46 thoughts on “Viewpoint: Issues with the ‘Zoned Capacity’ Argument”

This article adds some new points and subtlety to the ongoing discussion. In effect, Zoned Capacity is only really meaningful when there is significant excess capacity in every zone where there is a need, not just concentrations in a few zones which may or may not be where the demand will be. As a statistical thing it’s like my favourite line that the Vatican has a density of two Popes per square mile. An interesting statistic but it’s not like there’s excess capacity since they only have one at the moment.

As the author of the referred to articles, perhaps I can shed more light.
The issue of zoned capacity is indeed relevant but needs to be understood in context.
First I would like to give Gil Kelly full credit for having the integrity to confirm that there is indeed enough zoned capacity to meet CoV growth to 2041. Zoned capacity was commonly acknowledged by the city in decades past when they used to act more transparently. Over the last decade there has been an unprecedented level of denial while using a manufactured crisis capitalism that suggests we have nowhere to put the projected growth when that is false.
This is not to say that there won’t be further rezonings or prezonings, just that there isn’t a need to just approve every bad scheme to the max in order to meet growth. We have time to plan properly and do what is best for the public’s benefit, not just what is the most profitable. It changes the tone of discussion to one of quality rather than just quantity.
There is no such thing as single family zoning in the CoV since all RS zones now allow up to 3 units per lot. This was not counted by the city’s consultants as part of the existing zoned capacity.
I would also like to point out that much of the demolition of the character and heritage housing stock could have been avoided by making incentives for retaining and improving rather than demolition. The rezoning in 2009 that allowed much bigger monster houses should never have happened and laneway houses should have been as an incentive to retain a character house rather than demolish and build new. We could have had continued growth while being more sustainable about how that is done through multi-suite conversions that retain character while adding rental and mortgage helpers.
Same is true that we should not be directing new increased density into areas that have a large stock of the existing rental apartments that are more affordable. More development pressure on this stock should be avoided. We need to plan smarter. Much of the affordability crisis is being caused by foolish, careless planning that causes unnecessary displacement, like reducing tower separation guidelines in the West End.

However, more careful planning that avoids directing development pressure onto the older more affordable rentals will prevent the loss of these rental units and prevent people from being displaced.
Careful planning can also increase rentals by encouraging more conversions of non-strata units in existing buildings. This would create more affordable rentals than those in new construction.
By focusing development where it will do the least harm to the existing stock that we should be keeping while directing new development where it is most appropriate from a public policy perspective.

You know what would be an easy way to avoid “directing development pressure onto older more affordable rentals”? Allowing intensification on lots with more expensive housing, perhaps the vast sea of yellow RS-1 land in the top map.

Meanwhile, you’ve made an op-ed career of persuading wealthy homeowners that we shouldn’t do exactly that.

Upzoning to more multiple units doesn’t make land more affordable. For example, as the West End Plan was being approved, a developer bought two older apartment buildings for $16m after the plan allowed it to go up to 60 storeys. Then it got flipped for $60m and again 3 months later for $68m. Rumors are it went even higher, but that cannot be confirmed since it was done through selling corporate shares, without going through the land title office or paying transfer taxes.

The upzoning triggered the land inflation. We see that all throughout the Cambie Corridor where RS zones are upzoned for multi-family. New units go for $1200 to $1700 per sq. ft. Hardly what one would call affordable. There may be good reasons to upzone in some locations, but upzoning is not needed to meet regional growth and it will not make things more affordable. That needs to be considered in careful planning.

Simple supply/demand economics don’t work when real estate is no longer related to the local economy.

You’re missing the key point: we’re not trying to make *land* more affordable, we’re trying to make *housing* more affordable. It’s an important distinction. Upzoning increases the price of land (because more people can now compete for the same land) but lowers the price of housing (because each new unit takes up less land).

Your strategy of keeping zoning tight for lower land prices is basically what’s been tried in the Drummond/Belmont section of West Point Grey, where minimum lot sizes are 3-4x bigger than the rest of the city. Land value per square foot is quite low (nice for the mansion owners’ property taxes!), but the entry point is about $20M because you need to buy so much land: https://twitter.com/ahvancouver/status/779835760572633092

There is no magic bullet. Some development may be appropriate in some locations. But we should not expect the speculative inflation that brings will make things more affordable. It has not been working so far. In fact it is making things worse. Not the answer to affordability, but some may want the choice in some locations.

The example I gave above in the West End of an inflated land value of $68m will ensure that everyone of the units in the 60 storey upzoning will be luxury and very expensive while the people who used to rent the older apartment buildings being demolished are displaced.

If development, condos, and density are the cause of price increases, how do we explain the fact that the greatest price increases occurred in the neighbourhoods with the least development, the fewest condos, and the least density?

Housing prices in development-exempt West Side neighbourhoods skyrocketed over the past 15 years.

Unfortunately, Ms. Murphy, the phrase “zoned capacity” is commonly employed to reject any rezoning proposal whatsoever, not just the “bad” schemes, however that is understood by every party involved. The affordability crisis is not the result of “foolish, careless planning”, but by firmly entrenched individuals who will not permit multi-family developments in their precious unicorn neighbourhoods, regardless of permitted zoning. If City Hall is a culprit here, it’s because they don’t have the stomach to stand up to anyone (anyone at all) with a bullhorn and nostalgia blindness.

An interesting fact is that before the city’s consultants report confirmed that there is enough zoned capacity to meet growth, even though the city knew that to be true, the planners were using the need to meet regional growth as the excuse to upzone Grandview. That was the first thing they cited in the planners’ presentations. Yet even when that was conirmed otherwise, they continued to upzone the apartment zones where the affordable rentals are and using the excuse of regional growth to do so. By acknowledging zoned capacity it changes the discussion to one of what makes sense rather than just what industry would like to see.

Same with reducing the tower separation guidelines in West End that had previously been put in place to protect the older more affordable rental buildings, but now adds development pressure to those areas.Not a wise thing to do.

Right now industry has way more influence into land use policy. Not a balance at all.

I don’t get your concern. Citizens’ groups in Vancouver have never been given the power to have even a modest amount of meaningful input on development, much less reject any development The City wants to push through. If you can point to a couple of examples your remarks might make sense. The present scheme is top-down 100% which you appear to favour. Enjoy it.

I agree that demolition and preservation of existing rental and heritage stock needs to be addressed, especially in the context of development pressure.

But I also see that there continues to be no acknowledgement on your behalf of the obvious role geometry and demographics have in land economics. A minority share of population and housing units continue to occupy the lion’s share of land in this town. Land is where the value is, and land doesn’t grow on trees.

One simple illustration: there are 18 acres of land locked up in the 24-foot setbacks of every 1,000 RS lots. There is tremendous potential in freeing up even half of that area, including shifting heritage houses forward to a 10-foot setback line to help accommodate rowhouses to the side or rear. Keeping / shifting heritage structures and retaining heritage trees and designing around them just adds fineness to the neighbourhood texture, but you need space to make it work.

Allowing subdivision and attached freehold rowhouses (with or without suites) will go a very long way to meet the latent demand Bryn Davidson speaks of.

In the RS zones today, you can build two suites plus a laneway house. All three units are non-strata that can be used for family or rentals. The RS zones are the only purely rental zones we have in the city. Townhouses can generally be stratafied so they are not part of this zoning. If the RS zones allow strata they will lose that rental, some of the secondary suites are the most affordable rentals in the city. In the RS zones, if they eventually want strata, multi-family conversion dwellings (MCDs) would be a better fit in most areas since it would encourage retention of the character and heritage buildings that is more sustainable than demolishing them. Would create the same number of units and be more reasonably priced while retaining neighbourhood character and less waste of resources.

Why do you assume that increasing FSR above current levels is at odds with “neighborhood character”? Even the RS lots with 3 units is well below what land prices are pressing for in terms of density, and below what a landlocked city core needs to move towards. If we want to “carefully” plan, I think we’re already 20 years behind and your proposals will not make the situation much better in the next 20.

We have great examples of upzoning in areas like Norquay and Mt Pleasant that are ready to be rolled out. I doubt most homeowners jump at the opportunity of needing to become part-time landlords. RS zoning is accepted by families because there is no other choice that does not require taking on tenants. What families are forced to do to acquire ground-level housing in this town is close to contemptible. I will be advocating heavily for significant RS rezonings. See you at the hearings.

I’m glad that myths like this are being perpetrated. Many of the millennials of Generation Squeeze, given more a critical analysis of them and other issues regarding ‘good planning’ will soon catch on and finally see them for what they are. Then the real dialogue will begin.
More!

We need more density that is not a highrise and not condos even in mid-rises ie townhouses or 4-6 plexes or rowhousing. As such we will continue to lose families to suburbs if we do not upzone or refine RS to include (stratafied, seperately owned) townhouses/rowhouses.

If you look at the UK that is very common, and fairly inexpensive to build, and a true middle class housing option for thousands, utterly missing in Vancouver.

I went to Gil Kelly introduction event and was shocked to, basically, hear him repeat what Vision has been advocating – no changes to encourage townhouses. Micheal Geller called him on this. I couldn’t help thinking that Kelly was given all the ideological imperatives that Vision has decided on and if he accepts all that he can have the job.

He talked briefly about working with the region but only vaguely. He’s going to busy with The Flats, The Viaducts, The Broadway Subway, Jericho Lands, the Waterfront Station site, Broadway & Commercial, and all those other items we all know already about.

I got the feeling that he has loads of experience but is not going to stop the sprawl to the suburbs, where those townhouses sell like crazy.

This will just lead to more commuting and more traffic and more bridges.

Tom, thank you for posting the Sightline Institute report. It’s a very thorough rebuttal of the inaccuracies and misassumptions of the ‘existing zoned capacity is enough’ argument.

Note in particular the highly relevant graph illustrating the zoned capacity with corresponding land area, the gulf between zoned capacity assumptions and the actual population growth recorded by the census, and the fact that the actual build-out does not jive with zoned capacity.

There is a lot of insight in Davidson’s premise that pre-zoning should supersede zoned capacity.

What’s wrong with Murphys suggestion that developing properly prepared neighborhood plans and then, goodness me, following them? In addition, why all the oposition in this discussion to using the existing zoned capacity so that spot rezonings STOP? It seems that Gill Kelly has simply stated the obvious.

The key words here are “properly prepared plans.” I don’t believe Murphy’s defense of existing zoned capacity accounts for everything that is important to address affordability, land use and “proper planning.”

One of the key points in the discussion (which I didn’t realize until I started digging) is that the spot re-zonings are a very large component of the ‘zoned capacity’. The technical meaning of ‘zoned capacity’ seems to be very different from how it’s conveyed in general conversation. This is why I felt we needed to dig into the topic a bit more…

Rezoning RS zones for townhouses would enrich all you developers who are so wildly in favour, but would do nothing to increase affordability for families, which is the ostensible rationale. As we have seen over the last 30 years, increasing supply and increasing prices have risen together. Townhouses in Vancouver sell for at least $1.1 million which is clearly unaffordable for the average family with a median income of $67,090. As Yvrhousing said, land prices in the RS zones are simply too high to provide affordable townhouses for average families. What is needed are reasonably-priced 3 bedroom condos rather than the over-supply of pricey 1 bedroom units that developers have long preferred to build as they are more lucrative. Now that the City has belated acted to encourage multi-bedroom condos, and the Province has belatedly acted to discourage speculation and the Feds have belatedly acted to discourage money laundering, perhaps families will once again be able to live here.

…land prices in RS zones are simply too high to provide affordable townhouses fro average families.

When you have an expensive pie (scarce land), you divide it into smaller more affordable pieces. Rowhouses and low rise townhouses will on average ring in a lot less per unit than a detached house on a 4,000 square foot lot.

Increasing the number of units and FSR adds to land inflation and speculation rather than bringing it down. Just look at what happened along the Cambie Corridor and the West End after those areas were further upzoned. See my examples above.

The lane house policy increased FSR by 22%, but as far as I can tell, it didn’t add a similar amount to land value (if anything). Also – because the development of lane houses can happen without consolidation the land economics can be fundamentally different. Our clients can build a high end home for half the price of a condo (if they’re lucky enough to have parents with land). Single-lot development can open up a range of additional options for non market and affordable housing.

Either way, if you up-zone and the price of land goes up, the land cost per dwelling unit often goes down.

The lane house experiment seems to suggest that a wide enough pre-zoning diffuses the price pressure to the point of it being almost non existent (though I imagine we’ll be debating those mechanisms for a long time…)

Laneway houses are non-strata so they have less influence on land value. The upzoning in 2009 to a larger monster house has however driven prices higher and increased demolition. If they had made laneway houses and increased FSR in the main house as an incentive to retain character houses, that would have been a win all around.

I don’t believe there’s any evidence that the 2009 bylaw update had a proportional impact on prices or demolitions. If I’m wrong I’d be interested to see the data.

The density increase was simply to go from a partial basement to a full basement. The zoning envelope and height were unchanged. Given this, the characterization of new houses as a ‘monster houses’ seems a tad hyperbolic.

There certainly are plenty of ugly and weird new houses that have been built (you may say that mine are in that list!) but I think it’s problematic to conflate an aesthetic preference with housing policy.

Not to say that there shouldn’t be any upzoning anywhere. Proper planning process is essential. The point is: don’t expect that upzoning will make things more affordable. It won’t. Not while our market is driven by global economics. Prices will be based on international prices driven by international demand that no matter how much supply we build it will never be enough.

Assuming supply shifts don’t affect price is, well, more than a little questionable. But let’s say you’re right about sale prices for the sake of argument – are you really willing to make the same claim about the rental market?

Recent upzonings are adding rental supply (both purpose-built units and condos that end up on the rental market), and I don’t think anyone is willing to argue that demand in our rental market comes from near-infinite reserves of foreign money.

New rentals are smaller and not affordable and they inflate the overall rental rates. Often they replace older larger more affordable rentals so create a net loss of affordability. Purpose built rentals are more affordable than condos that are rented out. But they still are expensive.

The foreign speculation factor has contributed just how much to housing prices over the last decade? No one claiming it’s primacy regarding high prices can nail it down to a portion of the ~400% rise since the late 90s with any accuracy. Most assume it’s huge, even in the absence of hard data. I think it’s extremely uncertain, but it sure makes for dramatic headlines.

There has been a drop in sales since the foreign buyer’s tax was enacted, but the drop occurred over the entire year prior too. What’s interesting is that the drop in price does not correspond to the drop in sales, even since the tax came in. Over a year the drop in sales in the region was 47.6% (detached), 20.3% (apartments) and 32.2% (attached), while the benchmark price of all residential property transactions increased by 28.8% over the year, and decreased by only 0.1% a month after the tax. [Source: Real Estate Board of Greater Vancouver]

I suggest the discontinuity between movements in sales and prices only indicates other forces have been at work too to drive up prices, such as a land shortage, a huge shortage in the missing middle of housing type, cheap credit, demographics, etc. We have to note the rise in sales and prices in other communities as Metro Vancouverites cash in and buy elsewhere.

Much of the new Cambie corridor development is oriented toward the luxury market, which is the development community’s answer to responsible planning on a rapid transit corridor where the 50-foot lots sold for $3-4 million. The fault regarding prices is not in the upzoning, but the lack of variation in housing type. Luxury condos or detached homes on 50-footers west of Main Street – that is not a diverse housing market.

Increases in land lift with increases in density are a common urban phenomenon worldwide. There is no crime in placing more dwellings on a set acreage that will result in an increase in the overall value of that acreage. However, that initiative has been limited to skinny corridors and not to the entire RS zoned lands which comprise 80% of the private land in Vancouver. There is no following logic that prices throughout RS zones when upzoned to moderate densities will increase in lock step with the land supply-limited corridors. Moreover, luxury Cambie corridor development exceeds the per-ft2 prices of other arterials with similar low rises aimed toward middle class incomes.

and let people decide for themselves what to build. Funny that we like to think of our society as open, free and tolerant, but we’re anything but when it comes to housing. Housing policy is more like an authoritarian state than anything else.

You can see with laneway homes – just free up people to make the choices they want, and solutions will follow. But the city and planning bureaucrats would never tolerate losing the iron fisted control they have right now over who can build what and where. People having choices? Never!

@bar foo, You make many very good points. I mentioned this article regarding Tokyo in August.

The costs in Tokyo have not gone up much either. One would imagine that Vancouver would want to be as free as possible, as you say, but no, the opposite is true. As you say, the control in Vancouver is iron fisted.

There used to be a profusion of illegal suites – “unauthorized” in agent doublespeak. Suddenly, that policy was repealed.

Almost as quickly, when the FSR was changed from .6 above ground to .7 with a basement, almost all new houses sprouted a second illegal suite – as common as mushrooms in that depressing hole in the ground. Builders put up signs: “Build to suite” – code for “Build two suites”.

These subterranean “mortgage helpers” are one of the most deleterious aspects of Vancouver housing.

Why do builders push them? There’s lots of cash to be made digging a big hole. Why do people buy them? They see total square footage and assume more is better, not realizing that to recoup the extra cost of a full basement will take forever – like buying a Prius – spend thousands to save hundreds.

More importantly, it’s icky to know that you can be busted for your “unauthorized” second suite – bye bye mortgage helper.

There’s no glamour in landlording it over basement dwellers; legal or not. There’s no glamour in living in a basement with views of your landlord’s feet.

Likewise, there’s no glamour in water ingress and sump pumps. Basements leak. It’s a matter of time. Coatings emulsify. Concrete cracks. Water tables rise. Pumps fail. Water is your enemy.

What house buyers – blinded by the prospect of extra footage and an extra mortgage helper don’t realize – is the huge cost and inferior quality of the bunker footage they’re buying.

Take a standard-size lot: 33×122. With a .6 FSR, using the convoluted equation in the Schedule, you get 326 sq ft more above ground than with a .7 FSR. Without the weird formula it would be 402 sq ft more. That’s superior space.

How much more is a square foot of living space worth if it’s above ground? Lots. How much do you save by not building basement hole apartments? Lots.